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New Zealand Dollar rebounds ahead of Thanksgiving holiday

By OFX

The New Zealand Dollar received a boost on Wednesday aided by a rebound in global equity markets and positive risk sentiment. The NZD/USD pair moved from a low of 0.6780 to touch a high of 0.6853 against the Greenback. The slight correction also comes from markets squaring out of positions ahead of the US Thanksgiving holiday.

On the data front, yesterday saw the release of New Zealand’s Credit Card spending which was up 6.3% y/y in October vs a previous 7.8% for September. The slight decrease could be a sign that shoppers and holding out as we lead into a busy shopping season.

Today we have Visitor arrivals due for release.

The Australian Dollar has managed to recoup some losses witnessed on Tuesday and clawed back towards the high 72’s during Wednesday’s day of trade. With a recovery in US equities and big leaps in European stocks the Aussie bounced from a low of 0.7202 to touch an eventual high of 0.7277 during the North American session. The pair has settled back down a shade since currently changing hands at 0.7263.

On the data front, yesterday we saw the release of Westpac–Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nice months into the future fell from 0.41% in September to +0.08% in October. The slowdown continues to point towards a slowing momentum into the new year. The news did little to move the Aussie.

The Australian macroeconomic calendar has nothing to offer this Thursday and US markets will be closed for thanks-giving.

On the technical front, Support sits at 0.7250 and 0.7210 with resistance up at 0.7300 followed by 0.7340.

The Great British Pound is weaker this morning when valued against the US dollar after UK Prime Minister Theresa May met the European Union’s chief executive in Brussels to try to secure a blueprint for the country’s post-Brexit ties with the bloc. Looking ahead Brexit negotiations and political uncertainty Britain remain the dominant drivers for the pound, and many analysts are cautious about its prospects.

On the release front there are no scheduled release today. Fairly quiet day ahead with Thanksgiving day in the US.

From a technical perspective, the GBP/USD pair is currently trading at 1.2774. We continue to expect support to hold on moves approaching 1.2760 while now any upward push will likely meet resistance around 1.2810.

Risk sentiment recovered marginally overnight which saw the USD depreciate against a basket of currencies. Adding to the mix was a number of headlines that also undermined the Greenback. The US Dollar Index (DXY) retreated by 0.09% to open this morning at 96.73. There wasn’t a lot to digest overnight but the Greenback did have some food for thought from the Fed and the headlines.

There was little on the economic calendar but there were some minor pieces to analyses. US headline core and durable goods orders were weaker than expected, further evidence of softer business investment as import tariffs take effect. Initial jobless claims also trended higher, while existing home sales rose for the first time in 7 months. Overall, the data adds to the growing body of evidence that the China import tariffs are starting to bite.

Speaking of the China tariffs, the US-China trade tensions are far from resolved. The Office of the US Trade Representative released an updated report on the investigations of China’s trade practices regarding technology transfer, intellectual property and innovation. Ultimately, the report concluded that China has not fundamentally altered its acts, policies or practices. In fact, in some cases it has regressed. The report added fuel to the fire with the much touted reconciliation looking a bridge too far.

The biggest news overnight however was that the Fed could end its cycle of interest rate hikes. According to a senior Fed source, the rate hikes could end as early as the spring as the Fed considers at least a pause on its gradual rate hikes. While the December rate hike has mostly been priced in, the news would mean much more debate on the outlook, moving into 2019.

It’s another quiet day on the economic calendar to close out the week with Thursday being on the slow side. The US also moves towards a pause on the economic news for Thanks Giving.

After failing in its attempt to push through the 1.15 handle on Tuesday, the single currency has maintained its bearish path overnight as it struggled to push through short term resistance at 1.1400. On early morning trade during the European session, the Euro rose initially on hopes of a compromise by the Italian Government of changed their budget plans.

With all eyes on Italy for the past week, Italian Deputy Prime Minister says he is open to reviewing fiscal plans, pulling the EUR/USD currency pair from 1.1370 to overnight highs of 1.1425.

A pullback was inevitable as movements back into safe haven currencies occurred on ongoing concerns over global growth and never-ending trade war tensions between the United States and China. Eventually settling this morning at 1.1383 against the greenback, further movements will be dependent of the account of the European Central Banks October meeting which releases its meeting notes this evening.

The Canadian dollar crept higher through out trade on Wednesday, recouping some of the weeks earlier loses as oil prices rebounded. Having plunged lower through trade on Tuesday the Loonie bounced off lows at 0.7510, pushing back through 0.7550 as investors shrugged aside softer than expected Wholesale sales, pouncing on the uptick in oil prices and improvement in broader risk sentiment.

Risk appetite and oil continue to drive broader CAD direction and perhaps highlight the depreciation through the last 6 weeks. Despite the overnight bounce oil prices remain under pressure and a glut of global supply will likely mean further depreciations moving through the end of the year, while ongoing trade tensions continue to weigh on risk appetite. As we look to the November 30 G20 summit for a possible US/China détente long term hostilities will likely carry into the new year and continue to weigh on broader sentiment and commodity driven currencies.

Hanging on just above 5 month lows our attentions remain fixed to fluctuating oil prices and shifting risk trends, while retail sales, inflation data and the National budget provide colour into the weekly close.